Reviews for The Washington almanac

The average rating for The Washington almanac based on 2 reviews is 3 stars.

Review # 1 was written on 2016-06-21 00:00:00 Crystal Farney Used for exhibition Investment in Housing: A Portfolio Approach to Effects of Changes in Tax Policy (p. 170-191) -It is often argued that tax policy has important effects on allocation of personal savings across alternative investments. In particular, it has been suggested that tax preferences for housing may lead to overinvestment in housing, thus undermining efficiency of resource allocation. Such an effect is magnified if the inflation rate is relatively high. (170) - The results of the analysis indicate that abolition of mortgage interest deduction would lead to a substantial reduction in the proportion of assets held in the form of housing (170) - Mortgage is tax deductible, capital gains from housing largely escape taxation, and the U.S. tax system does not include imputed income from owner-occupied housing in taxable income in contrast to many other member countries of the Organization for Economic Cooperation and Development (OECD). (171) - It may be noted that although the Tax Reform Act of 1986 retained full deductibility of mortgage interest, the lower marginal tax rates diminished the value of mortgage deductions. It is estimated that tax expenditures for mortgage interest payments fell from $34.2 billion under the previous law to $25.0 billion after the reform. State and local real estate taxes are also deductible. Tax expenditures related to this provision are estimated to have decreased from $12.1 billion to $8.5 billion as a result of the Tax Reform Act of 1986. (171) -…mortgage interest is deductible in the United States even though the imputed income from housing is not taxed. The fact that interest on loans are taken for business purposes is tax deductible and likely to remain so in the future, could make it difficult to remove the deductibility of mortgage interest from an administrative point of view. Such a tax change would create incentive for tax arbitrage (to transfer loans from mortgages to business loans or to set up businesses whose only purpose would be to enable the home owners to deduct their interest payments.) (186) An Expensive Thrift Industry (p. 373 -398) -Despite the record number of insolvency resolutions undertaken in 1988 by the Federal Saving and Loan Insurance Corporation (FSLIC), the U.S. deposit insurance agency for savings and loans, 25 percent of all thrift institutions were either insolvent or their capital was greatly impaired at the year’s end. (373) -Moreover, despite recent measures to augment its funding, at the end of 1988 the GSLIC had a significantly negative net worth and limited cash resources because of the scale of resolutions in recent years. (373) - The present savings and loan crisis can be traced back to the late 1970s and early 1980s. Because of tax incentives and regulation, savings and loans at that time held primary long term, fixed rat assets funded mostly by savings and time deposits. This mismatch in maturity exposed thrift institutions to considerable interest rate risk in those years characterized by a marked acceleration of inflation and subsequent sharp monetary tightening. By the time greater stability of interest rates returned, the industry had incurred such extensive losses that it was left with virtually no private capital. (374) Developments in Federal-State-Local Fiscal Relations: Implications for Infrastructure Investment and Education (p. 574)

Review # 2 was written on 2015-02-07 00:00:00 Luis Diaz 19 Jan. 2017 - My thoughts 30 years after reading this book: 1. It was a gripping and exemplary history of how this OMB Director in the first Reagan term actually tried to implement Reagan's proposed cuts in the Fed. budget and departments. 2. It showed how most of Reagan's cabinet appointees were far from part of the process to cut the budget, but were rather on the "receiving end" of the cuts, and not happy or supportive. 3. Weinberger (Defense) AND Haig (State) were particularly egregious offenders of Reagan's overall policy of cutting government, and purposely intimidated Stockman and his allies (Paul Craig Roberts and Martin Anderson) to stem any cuts in their departments. 4. Stockman made a very solid case for all the cuts. I have very warm memories of his vigor and comprehension of the need for and desirability of the cuts. From what I remember, he laid out the overwhelming benefits to society from the cuts, far outweighing the downsides to specific bureaucrats or other constituencies. 5. The main problem I had with the book was that it showed that Stockman never understood that any tax increases, which he advocated, would be totally counter-productive to the cuts in spending, and would slow down the economy and needed recovery. He thought tax increases were important, combined with the cuts in spending, to balance the budget. He totally ignored (probably more a fundamental misunderstanding than ignorance) that any increase in taxes would counter the forces for economic freedom and growth of the economy. Making the government smaller overall and especially a smaller part of the economy is key to continuing growth, productivity, innovation, justice and freedom. You know, the kinds of things that people immigrated to America for, fought a revolution to preserve and prospered under over a span of more than 200 years! 6. For these reasons above, I remember loving and hating the book, depending on the passage. I remember the first half or more being the good part - description of his life and the spending cuts process, though frustrating in many ways, because of the opposition from Reagan's own appointees. The second half was his realization that the cuts would not be deep enough, that "politics" was getting in the way, so deficits and increases to the national debt would be coming. At this point his personal turn from the Reagan Admin. was to announce this to Congress/press(?) and also to support tax increases. The famous "taking out to the wood shed" scene played out, where Reagan had to fire him, was described from personal experience. So - I highly recommend the book for historical insight, and for Stockman's excellent explanations of the benefits and need for government spending cuts, and for knowing just the kind of person Stockman is. Being aware of the massive flaw in Stockman is demonstrated by the later parts of the book and exhibited in his later career in investment banking and trying to own/run an auto parts manufacturer. It seemed to me an incredible betrayal, within Stockman's own philosophy or at least to general economics, to have misunderstood the importance of tax cuts so fundamentally. ------------- Stockman went on to work in investment banking with Peter Peterson, another even more dubious character, at Blackstone Group. His record there was mixed, but then he went on to found his own Investment group, which did fine for a while, but then invested in an auto industry supplier, and went bankrupt during one of the inevitable and fairly well documented difficult industry extended down-turns. After some significant time, he came back, with a splash, and started speaking and writing about the looming problem of government spending and the deficit. He had found out about and studied, to some extent, Free Market/Austrian Economics in the meantime, and so his arguments for cutting government spending are even more powerful and insightful now. HOWEVER, he still appears to be hung-up and totally confused on the issue of taxes and the "morality" of the deficit/debt. I remember reading and seeing interviews he granted just before and after his new book release on this subject (with Bill Moyers) and just being incredibly disgusted, especially in light of his increased knowledge and articulation of Austrian insights in how the business cycle works. He cannot plead ignorance of the better ideas at all now. So, anyone who reads Stockman should be totally aware of this horrible dichotomy between his good side and bad side. For me, the good does in no way outweigh the bad, especially since he has been exposed to and had plenty of time and opportunities to fathom and absorb the reality and true morality of the situation.